Excerpt:civil procedure code (act v of 1908), section 73 - rate-able distribution--investigation of question whether any decree-holder is real and bona fide decree-holder or benamdar for judgment-debtor--jurisdiction of court to investigate such question. - .....civil procedure code of 1908. the properties of the judgment-debtor were sold at the instance of a decree-holder, surendra narain singh, who is the opposite party in this rule. applications for rate-able distribution under section 73 had been previously made by several persons, each of whom held a decree against the same judgment-debtor and had applied to the court for execution of his decree before the receipt of the assets. as regards four of these-persons, the attaching decree-holder, surendra narain singh, alleged that their decrees were fictitious and that they were in reality benamdars for the judgment-debtor himself. these decree-holders thereupon contended that the question sought to be raised could not be decided under section 73. their objection, however, was overruled upon the.....

Judgment:

1. We are invited in this Rule to set aside an order made under Section 73 of the Civil Procedure Code of 1908. The properties of the judgment-debtor Were sold at the instance of a decree-holder, Surendra Narain Singh, who is the opposite party in this Rule. Applications for rate-able distribution under Section 73 had been previously made by several persons, each of whom held a decree against the same judgment-debtor and had applied to the Court for execution of his decree before the receipt of the assets. As regards four of these-persons, the attaching decree-holder, Surendra Narain Singh, alleged that their decrees were fictitious and that they were in reality benamdars for the judgment-debtor himself. These decree-holders thereupon contended that the question sought to be raised could not be decided under Section 73. Their objection, however, was overruled upon the authority of the decision in Radha Gobind Shah v. Shaikh Oozeer Jemadar 15 W.R. 219. The Subordinate Judge then took evidence and held that these rival decree-holders were benamdars for the judgment-debtor: in this view, he refused their applications for rate-able distribution. One of these decree-holders, Puran Chand Baid, has obtained this Rule, and on his behalf, it has been argued that, under Section 73, it is not competent to the Court to investigate whether any of the decree-holders is a benamdar for the judgment-debtor. It has been argued, on the other hand, that the Court is competent to determine this question, and in support of this view, reliance has been placed upon the decision mentioned by the Subordinate Judge. Reference has also been made to a passage from the judgment of their Lordships of the Judicial Committee in the case of Shankar Sarup v. Mejo Mal 23 A. 313 at p. 323 : 3 Bom. L.R. 713 : 5 C.W.N. 649 : 28 I.A. 203. Neither of these decisions is of any assistance in the solution of the question raised. In Radha Gobind Shah v. Shaikh Oozeer Jemadar 15 W. R. 219 the question was raised whether the Court could determine, in a proceeding for rate-able distribution, if the decree held by one of the rival decree-holders was barred by limitation. The observation made by the learned Judges to the effect that it is undoubtedly in the power of one decree-holder to show that the decree obtained by another decree-holder, under which the property had been attached, was a decree obtained by him by fraud or by Other improper means, was based upon Section 272 of Act VIII of 1859: there is no provision in the present Code corresponding to that section. The observation of the Judicial Committee in Shankar Sarup v. Mejo Mal 23 A. 313 at p. 323 : 3 Bom. L.R. 713 : 5 C.W.N. 649 : 28 I.A. 203 relates to an entirely different matter, namely, whether a conclusive character can be attributed to an order under Section 295 of the Code of 1882. The question raised before us, must, therefore, be determined upon a construction of Section 73.

2. Sub-section (1) of Section 73 provides that where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realisation, shall be rate-ably distributed among all such persons. On behalf of the petitioner it has been contended that the Court is bound to direct a rate-able distribution when application is made in that behalf, and the Court is not competent to inquire whether the applicants are real decree-holders, On behalf of the opposite party it has been argued that it is incumbent on the Court to ensure that the process of the Court is not abused, and that the Court must, for that purpose, ascertain whether the decree on the basis whereof rate-able distribution is claimed is a real decree. The question of the true construction of this section is not free from difficulty. But, in view of the decision of this Court in the case of In re Sunder Das 11 C. 42, which was followed in the case of Chhaganlal v. Fazarali 13 B. 154 we must overrule the contention of the petitioner. In the case first mentioned, the Court was called upon to consider whether, under Section 295 of the Code of 1882, it was competent to the execution Court to determine whether the words 'decree-holders' or 'persons holding decrees for money against the said judgment-debtor' signify bona fide decree-holders. There an application had been made for execution of a decree and the property of the judgment-debtor had been sold. A rival decree-holder applied for rate-able distribution. His application was resisted on the ground that he had taken an assignment of the decree he sought to execute for the benefit of the judgment-debtor himself. The question, therefore, arose, whether it was competent to the Court to determine upon evidence that the assignment had been made for the benefit of the judgment-debtor; in other words, whether there was a rival decree in existence, capable of execution against the judgment-debtor. Sir Richard Garth, C. J., held that it was competent to the Court to determine whether the claimant was a bona fide creditor or a sham decree-holder. He pointed out that if the contrary view were adopted, the section would give rise to a great deal of fraud, because any man, who is in difficulties and likely to have execution issued against him by bona fide creditors, might always have a number of sham decrees in readiness against himself to defeat he claim of any bona fide creditor who might put in an execution. As soon as the bona fide creditor put in his execution and sold the property, these sham decree-holders, who would really represent the judgment-debtor, might come in and completely sweep away all the assets from the bona fide decree-holder. This is obviously good sense and was relied upon before the Bombay High Court in Chhaganlal v. Fazarali 13 B. 154. Sir Charles Sarjent, C.J. followed the decision of this Court, although he stated that the question was not free from difficulty. It is worthy of note that the question was sought to be raised again before this Court in the case of Raghu Nath Gujrati v. Rai Chatraput Singh 1 C.W.N. 633. In that case, Sir Francis Maclean, C.J., doubted the correctness of the decision in In re Sunder Das 11 C. 42, while Mr. Justice Banerjee was inclined to follow it as well founded on principle. This divergence of judicial opinion, no doubt, shows that the question is not free from difficulty. We must bear in mind, however, that since the date of the decisions in In re, Sundar Das 11 C. 42 and Chhaganlal v. Fazarali 13 B. 154 the Code of Civil Procedure has been revised and re-enacted; if the Legislature had been of the opinion that the view taken by this Court and by the Bombay High Court was erroneous and did not represent the true intention of the framers of the Code, the language of the section might have been Suitably altered; bat although we find that the provisions of Section 295 have been reproduced with variations in Section 73, the phraseology has not been so modified as to justify an inference that the decision in In re Sunder Das 11 C. 42, is no longer good law. We, therefore, accept the view adopted by Sir Richard Garth and Sir Charles Sarjent and discharge this Rule with costs. The hearing fee is assessed at two gold mohurs.

3. It is conceded that this judgment will govern the other Rule (No. 3365 of 1912), which is also discharged with costs. The hearing fee in this Rule is assessed at one gold mohur.